With one huge dry caveat hanging over it, Agriculture Canada is predicting higher farm incomes this year across Canada and in the West.
The Prairies are projected to have realized net farm income this year of $2.219 billion, a whopping 80 percent above last year’s $1.233 billion.
In Saskatchewan, the projection is for a doubling of realized net income, which includes income and depreciation, to $779 million.
But the effects of the drought being felt through parts of Saskatchewan and Alberta cast some doubts on the numbers, government and industry officials caution.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
The July 23 income projections were based on analysis done to July 1.
“We did discount some for the wet conditions in Manitoba and the drought, which was being felt then,” said government economist Lambert Gauthier.
“But it may be that it will be more severe than we thought and that would reduce the numbers somewhat.”
That will almost certainly be the case, said Canadian Federation of Agriculture president Bob Friesen, who toured drought areas in mid-July with agriculture minister Lyle Vanclief.
“I have seen those areas and in many cases, the year is over,” Friesen said. “I find it hard to believe the numbers will end up being that strong. I say it is too early to be that optimistic.”
In Regina, Saskatchewan Agriculture policy development director Hal Cushon said there is a question of whether the drought will show up in this year’s farm income numbers or next year’s.
“I realize it’s a forecast and if it comes to pass, it’s great news for the industry,” he said. “But we’ll have to see how the crops fare.”
The federal government says the farm income projections are buoyed by record livestock receipts, which will be 20 percent above the five year average in 2001. There will also be a small strengthening in grains and oilseeds prices and a sharp increase in program payments.
Including emergency aid, increased crop insurance payouts, some provincial drought aid and Net Income Stabilization Account withdrawals, direct program payments to farmers are projected to hit a “near record” $3.53 billion this year, including $2.136 billion to prairie farmers.
In Saskatchewan, government-supported programs are expected to pay out $948 million – 57 percent of net cash income.
The projections are that farming expenses will rise between six and nine percent this year.
Federal economists predict that by year end, NISA accounts across the country will hold close to $3.4 billion, including almost $1.2 billion in Saskatchewan.
